In VFR-On-Top conditions at 12,500 feet MSL, what visibility and distance from clouds is required in Class E airspace during the day?

In VFR-On-Top conditions at 12,500 feet MSL in Class E airspace during the day, the visibility requirement is indeed 5 miles, which allows for sufficient visual reference to maintain safe flight operations. The stipulations regarding cloud clearance are also critical for maintaining visual flight rules (VFR) in this context.

The requirement of being 1,000 feet above the clouds ensures that the pilot maintains altitude separation from the cloud layer, preventing possible inadvertent entry into instrument meteorological conditions (IMC). Additionally, the requirement of being 2,000 feet horizontally away from clouds helps in maintaining a safe distance from potential obstructions and ensures good visibility to see and avoid other aircraft or obstacles.

These parameters are designed to enhance safety by providing ample separation from weather phenomena while allowing the flexibility of VFR-On-Top operations, thereby combining benefits of both VFR and IFR flight rules.

The other options do not align with these standard VFR-On-Top requirements, which is why they are unsuitable as answers.